S U B M I T T E D I N P A R T I A L F U L F I L L M E N T F OR T H E R E Q U I R E M E N T S
F O R T H E D E G R E E OF M A S T E R O F S C I E N C E I N C O M M U N I T Y
E C O N O M I C D E V E L O P M E N T IN T H E S O U T H E R N N E W H A M P S H I R E
UNIVERSITY A T T H E O P E N UNIVERSIT Y O F TANZANIA" .
June 2005
M W A I G W I S Y A DAVI D N D A G A M U L I L I L E
T A B L E O F CONTENT S
Acknowledgement i
Declaration i i
Dedication i
Copy Righ t v
Certification v
Abstract v i
CHAPTER 1
1. INTRODUCTIO
1.1. Backgroun
1.2. Missio
N1
d1
n Statement 1
1.3. Objective
1.4. Activitie
1.5. Assignmen
s2
s2
t3
CHAPTER 2
2. L I T E R A T U R
2.1. Theoretica
E REVIE W 5
l5
2.1.1. Povert y 5
2.1.2. Povert y measurements 9
2.1.3. Participatio n 1
2.1.4. Empowermen t 1
2.1.5. Developmen t 1
2.2. Empirica
l1
2.3. Polic
y Review 2
CHAPTER 3
3. R E S E A R C
3.1. Researc
H METHODOLOG Y 3
h Design 3
3.2. Primar
CHAPTER 4
4. FINDING
4.1. Finding
S A N D R E C O M M E N D A T I O NS 4
s4
4.2. Recommendation
9
s5
CHAPTER 5
Executive Summary 5
5. I M P L E M E N T A T I O
5.1. Projec
N5
t Proposal 5
5.1.4. Eg g Production 5
5.1.7. Participatio n 6
5.2 Fun
d Raising 7
BIBLIOGRAPHY
80
APPENDICES
Questionnaire 8
Workshop questions 8
Resource Assessmen t 8
Project Activitie s 9
Responsibility schedul e 9
Introduction Letter s 9
LIST O F T A B L E S
Table 1: Incom
Table 2: Leve
Table 3: Marita
Table 4: Cause
s of poverty 4
7
0
1
1
Table 5: Povert
y indicators 4
Table 6: Reason
Table 7: Strategie
Table 8: Projec
t identification 4
Table 9: Sourc
Table 10: Feedin
Table 11: Eg
s fo r poverty eradication 4
5
6
e of finance 4
g program 5
g production schedule 5
d investment cos t 6
d Project income 7
ABBREVIATIONS
URT-VPO
UNDP
MOW&LD
TASAF
PRIDE
CED
SACCOS
ACKNOWLEDGEMENT
ii
without muc h trouble . I appreciat e thei r cordia l assistance . Thei r willingnes s t o
cooperate resulted int o this project paper .
M A Y O U R A L M I G H TY G O D BLESS US A L L
iii
DECLARATION
iv
DEDICATION
COPYRIGHT
vi
SPEKV!SOR CERT!F:CATIO N
f, A & e d Mwakabumb e certify thatf ftav e rea d the Projec t Paper , an d foun d i t to b e i n a
form acceptabl e fo r review.
Signaturel?^S&^.4.
Date.. 9.9.'^
vii
ABSTRACT
Rungwe Group that was established i n 2001 i s a community- based organization
formed b y 1 3 members, 7 men and 6 women. Out of 13 one i s a governmen t
employee, the rest are self-employe d and peasants. They are among the poores t
Tanzanians.
This research wa s carrie d out to assist member s o f the grou p to establish a poultry
project that w i ll generat e income for the benefit o f members o f the group , their
families an d some vulnerable people livin g i n Ilolo village .
The research an d analysis have show n that the governmen t alon e cannot succee d
to reduce povert y to all Tanzanians. Poverty is increasing despite th e effort s o f the
Government to reduce it . Extra effort s ar e needed fro m th e people themselves .
Among othe r things that I managed t o facilitat e members o f the grou p was th e
writing of a project proposa l about commercia l layer s (poultry). Estimated total
initial cost was Tsh. 1,760,000.00. Than k God the Grou p has alread y managed t o
get Tsh . 1,700,000.0 0 an d the poultry shed has bee n constructed . The y expect t o
viii
A s pe r cash flow (Tabl e 18 ) the project wil l hav e a balance of Tsh. 3,268,850.0 0
at the en d of its life span . The profit w i ll b e used to reinvest int o the project for
phase two (Tsh. 1,624,425.00), dividends for members o f th e grou p ( T s h.
1,299,540.00) an d for helping vulnerable people in Ilolo village ( T s h.
344,885.00).
CHAPTER 1
1. INTRODUCTIO N
1.1. B A C K G R O U ND I N F O R M A T I O N A B O U T R U N G W E I L O L O G R O U P
Rungwe- Ilol o Grou p was establishe d i n November 2001 wit h 1 4 founders. Th e
number o f members currentl y i s 13 , 7 me n an d 6 wome n age d betwee n 25 - 3 5
years.
Rungwe -Ilolo Grou p is found i n Rungwe district in Mbeya Region . I t i s located
2km fro m th e highwa y t o Malawi . Th e grou p i s i n Ilol o villag e nea r t o
headquarters o f the Moravia n Churc h i n Tanzania Southern Province.
1.2. Missio
n statement .
1.3. Objective
The objectiv e o f the grou p i s to reduc e povert y amon g themselve s throug h thei r
own initiatives , joint efforts , tim e an d resources . Th e ai m i s t o increas e th e
average incom e Ro m Ts h 21,690.0 0 t o Tsh . 35,000.0 0 pe r mont h b y th e yea r
2007
1.4. Activities
1.5. Assignmen
It is true that tangible and permanent developmen t canno t com e from outsid e th e
people. I t wit ! fade awa y withi n a shor t perio d o f time. Th e poo r peopl e shoul d
initiate, manag e and contro l their ow n development s o a s t o gai n self-confidenc e
and have faith in their abilities .
CHAPTER 2
2. L I T E R A T U R
2.1. Theoretica
E REVIE W
l
2.1.1. Povert y
The projec t i s abou t povert y alleviation . Th e questio n o f povert y i s ver y
complex. Ther e i s n o simpl e definitio n o f the ter m poverty . Differen t peopl e o r
groups o f people define i t differently.
Some peopl e hav e incom e povert y becaus e the y hav e no t acquire d formal basi c
education tha t coul d hel p the m t o utiliz e opportunitie s for bette r life ; som e
people ar e poo r becaus e thei r bodie s ar e wea k du e t o th e fac t tha t ther e ar e
inadequate healt h facilitie s an d therefor e ca n no t wor k effectivel y o n thei r lan d
and sometime s som e member s o f the famil y hav e t o stay a t hom e t o atten d som e
There i s also the questio n o f inequality poverty. People are poo r because ther e is
injustice t o economi c and socia l interactions . Just to mention tew examples, mos t
women ar e poo r becaus e ther e i s a bo y bia s education ; propert y ownershi p i s in
hands o f men. S o women/girl s have bee n deprive d o f their basi c huma n rights .
The resul t i s tha t mos t women/girl s i n Afric a an d Asi a ar e illiterate ,
undernourished, have high mortality rate and morbidity.
Some peopl e ar e poo r becaus e the y ar e incapabl e t o wor k du e t o physica l body
deformities a s a result o f wa r i n their countries.
Stan Burkey ( )
While i t i s importan t t o distinguis h conceptuall y th e notio n o f povert y as , non income povert y o r deprivatio n Ro m that incom e poverty , th e tw o canno t bu t b e
related sinc e income i s such importan t mean s to achiev e the capabilities .
Majid Rahne m (1992 ) say s tha t sinc e enhance d capabilitie s i n leadin g a lif e
would tend , typically , to expan d a person' s abilit y t o b e mor e productiv e an d
earn a highe r income , w e woul d also expec t a connectio n goin g Ro m capability
improvement t o greate r earning power an d not onl y the othe r wa y around .
2.1.2.Poverty measurements
The conventiona l metho d o f measurin g povert y i s Gros s Nationa l Produc t
(GDP), tha t i s th e tota l valu e o f nation' s annua l outpu t o f good s an d services .
G D P measurement s ar e usuall y presente d i n term s o f pe r capit a figures. Pe r
capita G D P figures ar e aggregat e numbers , i.e . the y ar e base d o n average . Bu t
averages ca n b e highl y misleading . A fai r numbe r o f ver y wealth y familie s i n
otherwise poo r countr y w i l l pul l averag e highe r tha n th e observatio n migh t
expect.
10
In recen t year s a thir d too ! ha s bee n developed , tha t is , Basi c Need s Approach
( B N A ) . Thi s measuremen t look s int o minimu m basi c huma n requirement s fo r
life suc h a s adequat e food, safe drinkin g water, suitabl e shelte r an d clothing . Th e
essential service s ar e considere d t o b e sanitatio n publi c transport , healt h an d
educational facilities .
11
2.1.3. Participatio n
Participation i s define d a s organize d effort s t o increas e contro l ove r resource s
and regulativ e institution s i n a give n social situation, o n th e part s fo r group s an d
movements o f thos e hithert o exclude d fro m suc h control . (Pears e an d Stiefe l
1979).
12
2 1.4 . Empowermen t
The issu e o f empowerment i s mor e amplifie d b y Davi d Mille r (1990 ) wh o says
that, i s there a commitmen t t o empowermen t i n the goa l statemen t o f a project ?
To d o tha t ou r ma n w i l l nee d t o hav e th e powe r t o contro l th e fis h o r mor e
realistically, shar e th e powe r wit h other s t o contro l th e fis h an d probabl y th e
water tha t the fis h swim s in. He furthe r say s that no matte r ho w har d o r wel l h e
fishes, n o matte r wha t loca l decision s h e makes , i f he i s unabl e t o shar e i n th e
control o f th e exogenou s factor s that impinge upon his life, h e i s not empowered .
13
14
The issu e o f empowermen t doe s no t com e ove r night . I t i s a proces s tha t take s
time, s o i t need s endurance , tolerance , trus t an d lov e fro m member s o f th e
community that needs to attai n developmen t an d fro m th e facilitator s who woul d
like that economic, social and political developmen t i s attained .
2.1.5. Developmen t
The concep t developmen t ha s man y definitions , a s ar e definition s fo r poverty .
Also there are man y theories pertaining to the concep t development .
15
Ponna Wignaraja ( )
16
2.2.Empirical
2.2.1.Poverty at global level.
The situatio n of poverty worldwide i s alarming and shocking . The level o f wealt h
of th e worl d i s increasing , bu t majoritie s o f countrie s especiall y i n th e Sout h
become poo r an d poo r da y aAe r day . I t i s sai d tha t 8 0 pe r cen t o f th e worl d
wealth i s i n the hand s o f countries i n the North , an d countrie s i n the Sout h own
only 20 per cent .
The Asia n financial crisi s left 1 3 million peopl e losin g jobs an d rea l wages wen t
down b y 4 0 pe r cen t t o 6 0 pe r cen t i n Indonesi a alone . I n Brazi l a t th e en d o f
1998, 50 per cen t o f the peopl e who had risen out of poverty since 199 4 fel l bac k
below the poverty line .
17
2.2.2.Poverty in Tanzani a
Tanzania i s on e o f th e leas t develope d countrie s wher e peopl e liv e unde r
extremely poo r conditions . Thi s i s th e reaso n wh y Tanzani a wa s amon g th e 3
African countrie s t o benefi t fro m th e progra m relie f o f deb t tha t i s know n a s
High Indebte d Poo r Countries (HIPC). Tanzani a was include d in the progra m in
the year 2000.
18
19
The main food crop s grow n i n the distric t include maize, bananas, cassava, swee t
potatoes, yam s an d beans . Cas h crop s includ e coffee , tealeaves , banana s an d
beans. Also peopl e o f Rungwe distric t keep dair y cows, cattle, an d loca l bree d o f
hens that are kep t i n a free-range environment .
20
21
In 1973/7 4 Tanzani a like an y othe r countrie s i n the worl d especiall y those South
of th e Sahar a experience d o i l crisis , whic h erode d th e economi c achievemen t
registered for th e pas t years . Th e highe r o i l prices reduce d th e foreign reserve s
and culminated to deficit in external current account .
22
23
24
Strategy (NPES) , whic h provide s overal l guidanc e an d Aamewor k fo r co ordination an d supervisio n o f th e implementatio n o f policies , an d strategie s o f
poverty eradication . Th e Povert y Reductio n Strateg y (PRS ) was the n formulate d
as a medium term strateg y o f poverty reduction ( U R T, 2002) .
25
studies sho w a n increasin g gap betwee n th e poo r an d non - poor (ibid.) . Members
of Rungw e Group who are rura l dwellers are those Tanzanians wh o are poor .
26
27
Women i n Bangladesh who practice smal l scal e poultry production stress that th e
benefits i s not onl y th e mone y the y ear n bu t tha t they ge t basi c skill s i n running
an enterpris e an d opportunitie s to mee t othe r wome n through regula r session s for
training o r credi t collection . Thi s break s i n thei r isolation , an d bring s i n the
opportunity t o lear n ne w skills , enhance s thei r self-confidenc e an d encourage s
28
them t o tak e o n othe r tasks . I n term s o f livelihoo d Ramewor k the y hav e earne d
important huma n an d socia l capital an d ma y begi n to mov e ou t o f th e deprivatio n
trap.
29
v) T
Policy numbe r i above i s there to guid e the secto r t o b e on e o f the drivin g force s
towards povert y alleviation . I d o no t kno w if the Governmen t has take n step s t o
implement th e policy . I t seem s the polic y ha s no t bee n give n much attentio n b y
the ministr y concerned. A repor t abou t performanc e o f the Ministr y o f Water and
Livestock Developmen t ( M o W & L D ) , 2004 ) doe s no t tel l muc h abou t th e
implementation o f thi s article.
The polic y i f implemented w i l l mak e the poultr y industry les s expensive becaus e
transport cos t w i l l b e reduce d an d the suppl y sid e w i l l increas e an d migh t lea d
into pric e decreas e i f other thing s ar e equal . Agai n I a m no t sur e whethe r th e
Government ha s manage d t o encourag e privat e investor s int o hatcher y busines s
in ne w areas. I am afrai d that this polic y might no be implemente d due to the fac t
that privat e investor s ar e deman d driven . They g o wher e ther e i s a market . Th e
scarcity of day old chicks w i ll continu e to prevail .
30
Policies ar e ther e tha t guid e the poultr y industr y takin g int o consideratio n bot h
traditional an d commercia l poultry production. However, it i s obvious that som e
of th e policie s a s highlighte d abov e ar e no t implemented . Th e policie s b y
themselves ar e goo d bu t i f not implemente d ar e useless . I t i s ver y unfortunat e
that those policies not implemente d ar e pro poor, s o the loser s are the poor .
31
ii) T
iii) T
iv) T
v) T
32
33
ii) Member
34
CHAPTER 3
3. Researc
h Methodology
3.1. Researc
h design
sectional.
35
The populatio n of the surve y was 1 3 people. I n this cas e ther e was n o sampling.
A l l member s o f Rungwe Group filled i n the questionnaire .
The rate of response wa s 10 0 per cent . A H 1 3 members filled i n and returne d th e
questionnaire.
36
Observation metho d wa s use d durin g the worksho p and outside the worksho p by
visiting the home s o f all member s o f Rungwe group . There was a n opportunity to
observe healt h statu s o f thei r families , typ e o f house s the y hav e an d thei r
economic activities.
Also th e researc h wa s conducte d by going through secondar y dat a i n order to ge t
what others hav e written about poverty and poverty alleviation strategies .
3.2. Primar
The dat a collecte d had t o b e processe d an d analyzed . The data wer e analyse d by
using differen t technique s suc h a s descriptiv e statistics , correlations , an d
comparisons.
37
Frequency of income
Percent
Cumulative
5,000
15.4
15.4
10,000
15.4
30.8
38
12,000
7.7
38.5
15,000
15.4
53.9
20,000
15.4
69.3
7.7
77
7.7
84.7
30,000
37,000
50,000
7.7
92.4
53,000
7.7
100
100
100
282,000
13
39
40
Frequency
Percent
Informal educatio n
7.7
Primary educatio n
12
92.3
Total
13
100
41
Frequency
Percent
Married
53.8
Single
46.2
Total
13
100
42
Frequency
L o w educatio n
13
Lack of land
Many dependants
Lack of capita!
13
43
Frequency
L o w incom e
13
Inadequate clothing
N o hous e
44
Percent
1,2,3
53.9
2,3
46.1
Total
100
Seven member s sai d this. Five wer e iemale s and two males. Those who expect t o
get financia l an d mora l support i n case o f problems for m 5 4 per cen t o f the tota l
members wh o ar e 13 . Majorities with suc h expectations ar e women . They are 7 1
per cent o f the 5 4 per cent ; onl y 29 per cent ar e men .
expressed thi s view. The result coincides with their leve l o f their income.
iii) T
45
Percent
Training
13
13
Sharing ideas
13
Access to land
11
Access to capital
46
votes/frequency
Percent
61
Dairy cows
31
Pig keeping
Total
13
!00
Crop productio n was no t selecte d alte r realizin g tha t the y ha d n o land . The onl y
way o f getting plot s o f lan d wa s t o hir e somethin g tha t need s money . The y ha d
47
Number of votes
Percent
1,3
38.5
61.5
Total
13
100
48
Key: 1
The resul t show s tha t 61. 5 pe r cen t o f member s o f Rungw e grou p though t o f
utilizing al l source s o f finance . Onl y 38. 5 pe r cen t vote d fo r contribution s an d
grants. The Majoritie s who voted fo r loan s wer e women . Possibl y wome n ar e no t
risk takers .
However, fo r th e sustainabilit y o f th e projec t the y wer e strongl y advise d t o
depend ow n their ow n contributions .
49
CHAPTER 4
4. FINDING
S A ND R E C O M M E N D A T I O N S
4 1 FINDING
50
we wer e tryin g t o registe r Rungw e Grou p member s o f the grou p wer e tol d t o
bring sh. 500,000.00 a s registration foes!
51
52
4.2. R E C O M M E N D A T I O N S
4.2.2. Th e Government shoul d mak e sur e tha t the nationa l incom e reache s the
poor i n order t o reduce poverty . Thi s can be done throug h the provision of basic
services i n rural area s suc h a s education, health , water , energy , an d rural roads .
Lack o f these essential service s complicates the problem of poverty.
53
4.2.5. The Government shoul d continu e t o sensitize peopl e t o for m group s and
establish incom e generatin g activitie s s o as to fight th e evil povert y jointl y an d
tape the available financial assistance that are onl y available to groups.
4.2.6. Peopl e shoul d hee d the call o f the governmen t t o join in-group s s o as to
fight povert y jointly.
54
CHAPTER 5
PROJECT PROPOSA L
EXECUTIVE SUMMAR Y OUTLIN E
P R O J E C T T I T L E : Poultr
y - Commercia l Layers
P R O P O S A L S U B M I T T E D B Y : Member
PROBLEM STATEMENT : T
MISSION S T A T E M E N T : T
TARGET GROUP :
ACTIVITIES:
55
O U T C O M E S : Th
eo
n projec
t planning
implementation an d evaluation .
Group member s wil l increas e incom e fro m
sh. 21,690.0 0 t o sh . 35,000.0 0 b y the yea r
2007
Group member s wil l improv e thei r garden s
because the y wil l b e abl e t o utiliz e chicken
fertilizer/manure i n their gardens .
Members of the communit y wil l lear n abou t
in door poultry keeping.
Members o f Rungw e communit y throug h
the grou p w i l l lear n an d possibl y imitate th e
spirit o f working together
Vulnerable group s wil l benefi t fro m th e
project becaus e members o f Rungwe Grou p
have the pla n o f helpin g the mos t need y
people i n llolo village.
R E Q U E S T F O R F U N D I N G: TSH.800,000.0
OUR CONTRIBUTION :
TSH.960,620.00
56
5. I M P L E M E N T A T I O
5.1. Projec
N O F ASSIGNMENT
t Proposa l
There ar e mainl y two reason s for helpin g members o f Rungwe group writin g thi s
project proposal:
To publiciz e the grou p b y givin g peopl e an d governmen t department s copie s o f
the proposa l for its support an d assistance .
To solici t fund s a s th e grou p need s fund s for initia l capita l that ca n b e solicite d
from banks , governmen t an d non-governmen t organization s o r fro m individuals .
In mos t case s al l these source s o f funding deman d projec t proposal s a s the mai n
requirement for gettin g a loan, grant o r donation.
The project i s on poultry keeping- layers chicken. The chicks w i ll b e kep t for th e
aim o f getting eggs to be sold .
57
*T
* Throug
* Throug
58
Formula
No. of bags
Total (sh.)
4-5
120xl20smsx60davs
36
11,000/=
396,000/=
76.44
11,000/=
840,840/=
74.88
11,000/=
823,680/=
73.32
11,000/=
806,520/=
71.76
11,000/=
789,360/=
35.1
11,000/=
386,100/=
50,000grams
6-9
245x130amsxl20davs
50,000grams
10-13
240xl30amsxl20davs
50,000grams
14-17
235xl30smsxl20davs
50,000grams
18-21
230x130gmsxl2davs
50,000grams
22-23
225xl30amsx60davs
50,000grams
Total
367.5
4,042,500/=
59
5.1.3. Eg g productio n
It is assumed tha t the first four month s eg g production will b e 70 per cent o f the
total layer s per day. The secon d quarter an d the third quarte r eg g production wil l
be 8 0 per cent an d 75 per cent respectively . At the fourth and fifth quarter s egg
production wil l b e 70 per cent and 60 per cent respectivel y per day. In total 3,07 3
eggs ar e expecte d t o b e produced . Th e percentages var y accordin g to ag e o f
chickens. Whe n the y star t layin g normall y thei r layin g performanc e i s low an d
picks u p when they are matured. But then layin g performanc e slow s down whe n
chickens are old. Fo r more clarification se e table 1 1 below:
Table 11: Egg Productio n
Age
No. O
Egg productio n
chicken
6-9
245
240x70%xl20davs
Total amount
No. o f egg
Price pe
trays
tray
686
2,400/=
1,646,400/=
768
2,400/=
1,843,200/=
705
2,400/=
1,692,000/=
644
2,400/=
1,545,600/=
270
2,400/=
648,000/=
30 eggs
10-13
240
240x80%xl20davs
30 eggs
14-17
235
235x75%xl20davs
30 eggs
18-21
230
230x70%xl20davs
30 eggs
22-23
225
225x60%x60davs
30 eggs
Tota!
3,073
7,375,200/=
60
Also a feasibilit y stud y was conducte d i n Mbeya municipa l wit h hotel s an d chip s
fryers.
Members o f Rungwe group visite d 1 0 hotels an d approache d 2 0 chips fryers. A ll
of the m assure d the m tha t there i s a shortage of eggs and that new entrants in the
market d o not fac e an y stif f market .
The result s encourage d member s o f Rungwe group to continue thinking about th e
poultry project .
The feasibilit y stud y als o reveale d tha t poultr y fee d i s availabl e i n Mbey a
municipal thoug h i t i s expensive . B y the tim e the y wer e conductin g the surve y
the pric e for layer s mash wa s sh . 11,000.0 0 per ba g of 50 kilograms. But there i s
an alternative . Poultr y fee d ca n b e mad e a t home . Ther e i s a formula . I t i s
61
5.1.7. Participatio n
Members of the grou p who are 1 3 have involve d themselve s i n the whole process
of planning . They decide d t o form th e grou p o n thei r own . The y starte d an d
implemented project s o n thei r ow n initiatives . Likewis e thi s projec t i s o f thei r
initiatives throug h participator y decision-making. The y participate d i n the nee d
assessment, setting the objectives , market survey , and resource assessment and in
budget preparation.
Also member s o f the grou p participated in the projec t b y organizing raisin g fond
event s o a s t o ge t som e mone y for investin g in the project . Preparation s for th e
event coste d sh . 70,000,0 0 a n amoun t tha t wa s contribute d b y member s o f the
62
group. Member s of the grou p wil l als o contributed sh . 360,000.0 fro m th e shares
they have with communit y bank.
Members o f the grou p bot h male s an d females ar e participatin g i n building a
chicken shed . The group has carpenters . The y are doin g the constructio n work.
63
64
65
There wil l b e a clea r timetabl e for vaccinatio n agains t fowl cholera , fowl
typhoid, new castle and fowl pox.
The poultr y shed will alway s remain clean without contaminated litter.
Evaluation
There will b e annual evaluation and final evaluation that will take place at
the en d of the lif e spa n o f the project , tha t i s two years. A l l members of
the group with an assistance o f a n expert will do annual evaluation.
66
67
sh. 2,500.0 0 pe r cull , henc e givin g incom e of sh. 550,000.00 . Therefor e expecte d
total incom e of the projec t i s sh. 7,925,200.00 .
5.1.13. Project Investment costs and Financia l Pla n
Investment cost s of the projec t wil l b e as follows:
Table 12 : Investmen t cost schedule
Item
No. of units
Tree poles
25
300
7,500.00
Tree barks
112
300
33,600.00
Iron sheets
30
6,300
189,000.00
Nails
10kg
1,300
13,000.00
Roofing nails
4kg
1,800
14,400.00
Wire mash
2pieces
10,000
20,000.00
Sand
I trip
16,000
16,000.00
Cement
4 bags
8,500
51,000.00
Roofing caps
4 pieces
2,500
10,000.00
Roofing timbe r
20 pieces
1,350
43,200.00
Doors
7,000
14,000.00
Iron rods
1 piece
20,000
20,000.00
Labour charge
25,000.00
Sub total
456,700.00
Chicks
250
3,000
750,000.00
Feeders/ drinkers
100,000.00
Grand total
1,306,700.00
68
Financial Plan
The financial pla n o f th e project w i l l b e as follows:
Investment costs Tsh
. 1,306,700.0
Tsh. 456,920.0
0
0
. 1J60.620.0
. 360,000.0
. 600,620.0
Tsh. 800.000.0
Tsh
Total Tsh
. 1J60.620.0
69
Months
4-5
6-9
10-13
14-17
18-21
22-23
Chicken fee d
396,000
840,840
823,680
806,520
789,360
386,100
Treatment
7,920
16,820
16,470
16,130
15,790
7,720
Electricity
4,000
8,000
8,000
8,000
8,000
4,000
Transport
48,000
48,000
48,000
48,000
24,000
Wages
20,000
40,000
40,000
40,000
40,000
20,000
Interest
36,000
36,000
Administration
26,000
16,000
16,000
16,000
16,000
10,000
Total
453,920
1,005,660 988,150
934,650
917,150
451,820
70
Sales o
Months
10-13
14-17
18-21
22-23
1,646,400
1,843,200
1,692,000
1,545,600
648,000
eggs
Sales o
6-9
f
550,000
culls
Total
1,646,400
1,843,200
1,692,000
1,545,600
1,198,000
71
income statemen t show s tha t the project with realiz e a profit of sh. 3,601,850.0 0
before othe r expenses . Fo r more informatio n refer tabl e 1 5 be!ow.
. 7,925,200.0 0
550,000.0 0 Tsh
. 200,000.0
. 7,725,200.0 0
Tsh. 4J23.350.0 0
Tsh. 3,601,850.0 0
. 3,601,850.0 0
Less
Electricity Tsh
Transport Tsh
. 40,000.0 0
. 216,000.00
72
Loan interes t
Tsh. 72,000.0
Wages
Tsh. 200,000.0 0
Administration
Tsh. 100,000.0 0
Tsh.
628,000.00
Tsh. 2,973,850.0
Net profi t
. 456,700.0 0
Feeders an d drinkers sh
. 100,000.0 0
. 556,700.0 0
Current assets
Stock
sh.
550,000.00
73
Cash sh
. 2,973,850.00
. 3.523,850.00
Total assets sh
. 4,080,550,-00
. 3,268,850.00
Owners equity sh
. 811,700.0
Total liability sh
0
. 4,080,550.00
74
Months
4-5
6-9
10-13
14-17
18-21
22-23
Eggs
1,646,400
1,843,200
1,692,000
1,545,600
648,000
Cutis
0 . incom e
13,000
T. inflo w
13,000
1,646,400
1,843,200
1,692,000
1,545,600
1,198,000
Chicks
750,000
Feeders
100,000
Shed
456,700
Feeds
396,000
840,840
823,680
806,520
789,360
386,100
Treatment
7,920
16,820
16,470
16,130
15,790
7,720
Electricity
4,000
8,000
8,000
8,000
8,000
4,000
Transport
48,000
48,000
48,000
48,000
24,000
Administr.
26,000
16,000
16,000
16,000
16,000
10,000
Wages
20,000
40,000
40,000
40,000
40,000
20,000
Loan
180,000
180,000
Interest
36,000
36,000
Cash
inflow
Cash sales
550,000
C. outflo w
75
1,306,700
453,920 1,185,660
1,168,150 934,650
917,150
451,820
flow
-1,293,700
453,920 460,740
675,050
757,350
628,450
746,180
Reserves
461,820
1,136,870
1,894,220
2,522,670
453,920 461,820
1,136,870
1,894,220
2,522,670 3,248,850
T. outflow
Net cas
1,080
N. inflows
1,293,700
Bank loan
360,000
Donations
933,700
455,000
Balance c/f
1,080
461,820
1,136,870
1,894,220
2,522,670 3,268,850
Key: O.Incom
t Profi t Rati o
The resul t o f net profi t rati o an d gros s profit rati o a s shown belo w sho w tha t for
every sh . 10 0 investe d w i l l brin g i n a profit o f sh. 40.9 9 befor e taxatio n an d sh .
45.40 a s a gross profit. Unde r norma l situatio n a project tha t yields a profit o f 4 0
per cen t i s really ver y profitabl e an d indeed i t encourages som e one to invest in
76
it. Through experience the poultr y industry is very profitable i f there is no marke t
saturation.
ii) Gros
s profit ratio
5.1.18. Investment A p p r a i s a l
5.1.18.1 Ne t Present valu e ( N P V )
N P V i s the differenc e betwee n th e presen t valu e o f futur e cas h inflow s an d the
present valu e of initial outlay , discounted at the firm' s cost of capital. Acceptable
rule is that N PV shoul d be greater tha n o in order a project to be acceptable .
0 x 1.0 0 = (1,306,700
Year 1 5,181,60
0 x 0.909 = 4,710,07
Year 2 2,739,70
0 x 0.826 = 2,262,90
9 6,972,83
6
6
77
NPV (r - r)
1
NPV +NPV
1
Assume r is 15%
2
Therefore NPV is .
2
YearO 1,306,700x1.0
0 (1,303,700
Y e a r l 5,181,600x0.87
0 4,507,99
Year 2 2,739,600x0.75
6 2,071,13
7 6,579,12
NPV 5,272,42
2
9
9
78
10+(0.517 ) x 5%
10 + 2.58 5
12.58%
IRR i s less than the cos t o f capital o f 20%. The cost o f borrowing the loa n of sh.
360,000 i s greate r tha n IRR ; therefore, accordin g to thi s criterio n the projec t i s
not acceptable .
5.2. Fun
d Raising .
Copies o f the projec t proposa l were distribute d to al l potential donors . A t that even t
the grou p manage d t o get sh . 350,000.00 as cash and sh . 450,000.00 as pledges. Als o
the projec t proposa l wa s sen t t o outsid e th e countr y wher e the y helpe d th e grou p
with sh . 800,000.00
79
Members o f Rungw e Grou p afte r gettin g fund s fro m th e fun d raisin g even t started
the wor k o f constructing a poultr y shed . Th e she d i s constructe d wit h a capacit y o f
holding 400 chickens at a time.
Members o f th e grou p di d constructio n works . Constructio n material s wer e locall y
available. They used tree s fo r poles , tree barks, bambo o tree s and grasse s for roofin g
shed instea d o f iron sheets . Total actual constructio n cost s stands at sh . 254,090.0 0
80
BIBLIOGRAPHY.
81